REG - CPPGroup Plc - Half-year Report <Origin Href="QuoteRef">CPPG.L</Origin> - Part 2
19/08/2016 13:40
- Part 2: For the preceding part double click ID:nRSR4721Ha
904
Revenue from continuing operations 35,441 38,908 76,771
Major product streams are disclosed on the basis monitored by the Board of Directors. For the purpose of this product
analysis, "retail assistance policies" are those which may be insurance backed but contain a bundle of assistance and other
benefits; "retail insurance policies" are those which protect against a single insurance risk; "wholesale policies" are
those which are provided by Business Partners to their customers in relation to an ongoing product or service which is
provided for a specified period of time; "non-policy revenue" is that which is not in connection with providing an ongoing
service to policyholders for a specified period of time.
Geographical information
The Group operates across a wide number of territories, of which the UK, Spain and India are considered individually
material. Revenue from external customers and non-current assets (excluding deferred tax) by geographical location are
detailed below:
External revenues Non-current assets
6 months ended 30 June 2016 6 months ended 30 June 2015restated (note 2) Year ended 31 December 2015 30 June 2016 30 June 2015 31 December 2015
£'000 £'000 £'000 £'000 £'000 £'000
(Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited)
Continuing operations
UK 15,264 21,692 42,179 11,180 6,145 8,062
Spain 6,067 6,231 11,873 111 131 122
India 5,575 2,779 6,256 15 11 14
Other 8,535 8,206 16,463 132 180 129
Total continuing operations 35,441 38,908 76,771 11,438 6,467 8,327
4 Exceptional items
6 months ended 30 June 2016 6 months ended 30 June 2015restated (note 2) Year ended 31 December 2015
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Requisition costs 549 - -
Commission deferral compromise and associated costs - (19,388) (19,388)
Restructuring costs - 455 711
Customer redress and associated costs - - 900
Exceptional charge/(credit) included in operating profit 549 (18,933) (17,777)
Tax on exceptional items - 1,916 2,344
Total exceptional charge/(credit) after tax 549 (17,017) (15,433)
Requisition costs in the six month period of £549,000 (H1 2015: £nil; year ended 31 December 2015: £nil) relates to
professional costs associated with the shareholder general meeting requisition and the subsequent interim injunction
proceedings.
5 Taxation
The effective tax rate at the half year is 9.1% (H1 2014: 12.2% restated; year ended 31 December 2015: 15.4%). The
effective rate is lower than the standard rate of corporation tax in the UK due to brought forward UK losses and overseas
tax losses, for which deferred tax assets were not previously recognised. The effective rate is partly impacted by higher
rates of tax on overseas profits. The 2016 full year rate may vary from this due to the territory mix of future 2016
profits.
6 Dividends
The Directors have not proposed an interim dividend for 2016.
7 Earnings per share
Basic and diluted earnings per share have been calculated in accordance with IAS 33 "Earnings per Share". Underlying
earnings per share have also been presented in order to give a better understanding of the performance of the business.
Six months ended 30 June 2016 (Unaudited) Continuing operations Discontinued operations Total
Earnings £'000 £'000 £'000
Profit for the purposes of basic and diluted earnings per share 2,291 - 2,291
Exceptional items (net of tax) 549 - 549
MSP charges (net of tax) 476 - 476
Earnings for the purposes of underlying basic and diluted earnings per share 3,316 - 3,316
Number of shares Number
(thousands)
Weighted average number of ordinary shares for the purposes of basic earnings per share 852,854
Effect of dilutive potential ordinary shares: share options 27,902
Weighted average number of ordinary shares for the purposes of diluted earnings per share 880,756
Earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic earnings per share 0.27 - 0.27
Diluted earnings per share 0.26 - 0.26
Basic underlying earnings per share 0.39 - 0.39
Diluted underlying earnings per share 0.38 - 0.38
Six months ended 30 June 2015 - restated (note 2) (Unaudited) Continuing operations Discontinued operations Total
Earnings £'000 £'000 £'000
Earnings for the purposes of basic and diluted earnings per share 16,912 169 17,081
Exceptional items (net of tax) (17,017) 25 (16,992)
MSP charges (net of tax) 283 - 283
Earnings for the purposes of underlying basic and diluted earnings per share 178 194 372
Number of shares Number
(thousands)
Weighted average number of ordinary shares for the purposes of basic and diluted loss per share 683,863
Effect of dilutive potential ordinary shares: share options 4,228
Weighted average number of ordinary shares for the purposes of diluted earnings per share 688,091
Earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic and diluted earnings per share
Basic 2.48 0.02 2.50
Diluted 2.46 0.02 2.48
Basic and diluted underlying earnings per share 0.02 0.03 0.05
Year ended 31 December 2015 (Audited) Continuing operations Discontinued operations Total
Earnings £'000 £'000 £'000
Earnings for the purposes of basic and diluted earnings per share 18,528 2,309 20,837
Exceptional items (net of tax) (15,433) (38) (15,471)
MSP charges (net of tax) 1,318 - 1,318
Earnings for the purposes of underlying basic and diluted earnings per share 4,413 2,271 6,684
Number of shares Number
(thousands)
Weighted average number of ordinary shares for the purposes of basic earnings per share 766,667
Effect of dilutive potential ordinary shares: share options 2,748
Weighted average number of ordinary shares for the purposes of diluted earnings per share 769,415
Earnings per share Continuing operations Discontinued operations Total
Pence Pence Pence
Basic and diluted earnings per share
Basic 2.42 0.30 2.72
Diluted 2.41 0.30 2.71
Basic and diluted underlying earnings per shares
Basic 0.58 0.30 0.88
Diluted 0.57 0.30 0.87
8 Intangible and tangible assets
Intangible assets Property, plant and equipment Total
£'000 £'000 £'000
Six months ended 30 June 2016 (Unaudited)
Carrying amount at 1 January 2016 4,825 3,502 8,327
Additions 3,109 186 3,295
Disposals - (15) (15)
Amortisation/depreciation (49) (149) (198)
Exchange adjustments 8 21 29
Impairment - - -
Carrying amount at 30 June 2016 7,893 3,545 11,438
Six months ended 30 June 2015 (Unaudited)
Carrying amount at 1 January 2015 808 3,820 4,628
Additions 2,357 140 2,497
Disposals (1) (8) (9)
Amortisation/depreciation (325) (253) (578)
Exchange adjustments (8) (42) (50)
Impairment (21) - (21)
Carrying amount at 30 June 2015 2,810 3,657 6,467
Year ended 31 December 2015 (Audited)
Carrying amount at 1 January 2015 808 3,820 4,628
Additions 4,436 194 4,630
Disposals (1) (15) (16)
Amortisation/depreciation (391) (465) (856)
Exchange adjustments (6) (32) (38)
Impairment (21) - (21)
Carrying amount at 31 December 2015 4,825 3,502 8,327
The carrying value of intangible assets includes £7,667,000 (H1 2015: £2,621,000, 31 December 2015: £4,585,000) relating to
the development of the core platform IT system, which is an asset under construction and will not be amortised until it
becomes operational. The Group's contract with SSP Limited includes a minimum future commitment for costs relating to
licensing and running the system of approximately £6,500,000.
9 Cash and cash equivalents
Cash and cash equivalents of £33,222,000 (H1 2015: £38,019,000; 31 December 2015: £39,810,000) comprises cash held on
demand by the Group and short term deposits.
Cash and cash equivalents includes £25,402,000 (H1 2015: £33,265,000; 31 December 2015: £33,879,000) cash held in the UK's
regulated entities CPPL and HIL. This cash is either maintained by the Group's insurance business for solvency purposes or
restricted by the terms of the VVOP. The VVOP restricted cash cannot be distributed to the wider Group without FCA
approval. The restricted cash whilst being unavailable to distribute to the wider Group, is available to the regulated
entity in which it exists including for operational and residual customer redress purposes.
10 Provisions
Customer redress and associated costs Onerous leases Total
£'000 £'000 £'000
Six months ended 30 June 2016 (Unaudited)
At 1 January 2016 1,611 829 2,440
Customer redress and associated costs paid in the period (346) - (346)
Utilisation of onerous lease provision in the period - (323) (323)
At 30 June 2016 1,265 506 1,771
Six months ended 30 June 2015 (Unaudited)
At 1 January 2015 6,356 1,658 8,014
Customer redress and associated costs paid in the period (1,829) - (1,829)
Utilisation of onerous lease provision in the period - (318) (318)
Transfer to trade and other payables (824) - (824)
At 30 June 2015 3,703 1,340 5,043
Year ended 31 December 2015 (Audited)
At 1 January 2015 6,356 1,658 8,014
Charged/(credited) to the income statement 900 (97) 803
Customer redress and associated costs paid in the year (4,821) - (4,821)
Utilisation of onerous lease provision in the year - (732) (732)
Transfer to trade and other payables (824) - (824)
At 31 December 2015 1,611 829 2,440
The customer redress and associated costs provision comprises anticipated compensation payable to customers through
residual customer redress exercises.
The onerous leases provision reflects the future lease payments and associated costs in the expected non-utilisation period
at a vacated office in the UK.
The customer redress and associated costs and onerous leases provisions are both expected to be settled within one year of
the balance sheet date.
11 Borrowings
30 June 2016 30 June 2015 31 December 2015
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Second Commission Deferral Agreement 1,367 - -
Borrowings due within one year 1,367 - -
Bank loans due outside of one year 2,500 - 1,000
Less: unamortised issue costs (116) (190) (152)
Second Commission Deferral Agreement - 1,320 1,343
Borrowings due outside of one year 2,384 1,130 2,191
The borrowing facilities are secured by fixed and floating charges on certain assets of the Group.
At 30 June 2016, the Group had undrawn committed borrowing facilities of £2,500,000 (H1 2015: £5,000,000; 31 December 2015:
£4,000,000).
12 Share capital
Share capital at 30 June 2016 amounted to £23,975,000, having increased from £23,939,000 at 31 December 2015. During the
period the Company issued 3,646,875 ordinary shares for cash consideration of £36,000 to option holders under its share
option schemes.
13 Share-based payment
Share-based payment charges for the six month period to 30 June 2016 comprise MSP charges of £500,000 (H1 2015: £310,000;
31 December 2015: £1,457,000) and Long Term Incentive Plan 2016 (2016 LTIP) charges of £296,000 (H1 2015: £nil; 31 December
2015: £nil). These costs are disclosed within administrative expenses, although the MSP share-based payment charge forms
part of MSP charges not included in underlying operating profit.
Number of share options Weighted average exercise price
(thousands) (£)
Six months ended 30 June 2016 (Unaudited)
MSP
Outstanding at 1 January 2016 36,135 0.01
Forfeited during the period (10,500) 0.01
Exercised during the period (3,647) 0.01
Outstanding at 30 June 2016 21,988 0.01
Exercisable at 30 June 2016 47 0.01
2016 LTIP
Outstanding at 1 January 2016 - -
Granted during the period 26,050 -
Forfeited during the period (8,000) -
Outstanding at 30 June 2016 18,050 -
Six months ended 30 June 2015 (Unaudited)
MSP
Outstanding at 1 January 2015 - -
Granted during the period 25,650 0.01
Outstanding at 30 June 2015 25,650 0.01
Year ended 31 December 2015 (Audited)
MSP
Outstanding at 1 January 2015 - -
Granted during the year 38,010 0.01
Forfeited during the year (1,875) 0.01
Outstanding at 31 December 2015 36,135 0.01
Nil cost options and conditional shares granted under the 2016 LTIP normally vest after three years, lapse if not exercised
within ten years of grant and will lapse if option holders cease to be employed by the Group. Vesting of 2016 LTIP options
and shares are also subject to achievement of performance criteria including a share price measure and an underlying
operating profit target over the vesting period.
The options outstanding at 30 June 2016 had a weighted average remaining contractual life of two years (30 June 2015: two
years; 31 December 2015: two years) in the MSP and three years (30 June 2015: n/a; 31 December 2015: n/a) in the 2016
LTIP.
The principal assumptions underlying the valuation of the 2016 LTIP options granted during the period at the date of grant
are as follows:
Weighted average share price £0.12
Weighted average exercise price -
Expected volatility 150%
Expected life 3 years
Risk-free rate 0.67%
Dividend yield 0%
There have been 26,050,000 share options granted in the current period. The aggregate estimated fair value of the options
granted in the current period under the 2016 LTIP was £2,852,000.
14 Reconciliation of operating cash flows
6 months ended 30 June 2016 6 months ended 30 June 2015 Year ended 31 December 2015
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Profit for the period 2,291 17,081 20,837
Adjustment for:
Depreciation and amortisation 198 578 856
Equity settled share-based payment expense 796 332 1,466
Impairment loss on intangible assets - 21 21
Loss on disposal of property, plant and equipment 15 9 16
Commission deferral compromise and associated costs - (19,388) (19,388)
Investment revenues (120) (131) (282)
Finance costs 224 1,416 1,523
Income tax expense 230 2,351 3,017
Operating cash flows before movement in working capital 3,634 2,269 8,066
Decrease in insurance assets 108 142 276
Decrease in inventories 5 4 50
Decrease in receivables 590 254 2,234
Decrease in insurance liabilities (219) (368) (830)
Decrease in payables (9,093) (3,310) (4,410)
Decrease in provisions (669) (2,971) (5,574)
Cash used in operations (5,644) (3,980) (188)
Income taxes paid (454) (187) (1,172)
Net cash used in operating activities (6,098) (4,167) (1,360)
15 Related party transactions
Transactions with related parties
The Group has agreed to settle legal fees incurred by Mr Hamish Ogston in relation to the interim injunction proceedings
which were announced on 11 April 2016 and subsequently withdrawn on 25 April 2016. Payment of these costs is outstanding,
but will not exceed £218,000. Mr Ogston is a substantial shareholder in the Group.
Remuneration of key management personnel
The remuneration of the Directors and Senior Management Team, who are the key management personnel of the Group, is set out
below:
6 months ended 30 June 2016 6 months ended 30 June 2015 Year ended 31 December 2015
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Short term employee benefits 1,284 1,322 4,098
Post-employment benefits 72 48 121
Termination benefits - 235 239
Share-based payments 568 265 1,128
1,924 1,870 5,586
This information is provided by RNS
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